Lack of Performance Reporting (Part 12)

Today I conclude this blog series with Jaime Levy Pessin’s 2011 WSJ article “Advisers’ Little Secret: Their Past Results.”

     > Charles Schwab’s website recently started to include performance…
     > for… [portfolios including] a choice of three preset investment
     > approaches… primarily made up of low-cost ETFs… Schwab… is
     > considering posting… numbers on its site for other portfolios…
     > managed [in a similar manner] for broad groups of investors…

This is another example of granularity and a window into the way robo-advisers (or certain TPAMs) might report performance.

     > In June, MyPrivateBanking started discussions among its members—
     > both investors and money managers—aimed at developing a Charter
     > for Ethical Wealth Management that would include a call for easier
     > access to advisers’ performance results.

While this sounds promising, I get no internet hits for “Charter for Ethical Wealth Management” beyond Pessin’s 2011 article.

     > BrightScope… is aiming to do the same with advisers’ performance
     > results. Last month the company started discussions with a
     > committee of IAs about ways to standardize performance reporting.
     > BrightScope also hopes to raise awareness of the performance issue
     > among investors, many of whom never ask to see advisers’ track
     > records.* “Our goal is to use consumer awareness to compel advisers
     > to play ball,” says… BrightScope’s chief executive [emphasis mine].

I have a call into BrightScope to get an update on this.

I hope BrightScope did press forward and I hope they succeed because I believe those looking for investment management are well-served by screening for encouraging past performance. The alternative is to sell people based on things like a good story, charisma, and rapport—none of which necessarily have anything to do with the ability to make money grow.

* Tenth and final reference to small demand for performance reporting and/or lack of performance reporting in the industry